Amlodipine

Inside AWP: The arbitrary pricing benchmark used to pay for prescription drugs

Inside AWP: The arbitrary pricing benchmark used to pay for prescription drugs

Average Wholesale Price (AWP) is a meaningless benchmark price for generic drugs.  This has been known for at least a decade, if not longer.  But despite its lack of substance, AWP-based payment models just won't go away.  Unfortunately the contractual reliance on a benchmark that has no relevance to actual price makes it very difficult for the payer to know if they are getting a good deal or not.  They are left to pay a fixed discount off of an unknown combination of meaningless, non-market-based, numbers. Seems like that would be tough sell, but this is drug pricing we are talking about, so of course, it's the norm. For the past couple months, we compiled data to create a visualization to help illustrate the problem that arises by anchoring generic drug costs to AWP.  The finished product is embedded in this latest report "Inside AWP: The Arbitrary Pricing Benchmark Used to Pay for Prescription Drugs," along with our observations and analysis.